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While incentives are still an integral part of the new-home market, they’re falling out of popularity in the rental segment as demand — and competition — strengthens.
The number of Zillow rental listings with concessions has dipped, going from 32.7 percent in December to 31.9 percent in January. The concession rate jumped 5.6 percent year over year to 32.2 percent in February; however, that marks the slowest annual growth pace since June 2023.
Zillow economic research data scientist Anushna Prakash said rental concession rates will continue to fall throughout the summer and spring as lease signings and renewals reach yearly peaks.
Anushna Prakash
“The rental market always ebbs and flows with the seasons, so it’s no shock that we’re seeing concessions start to level off as we move into the warmer months,” she said in the report published on Wednesday. “It looks like we’re beginning to see the market balance the ongoing high demand from renters with a competitive environment for property managers and landlords.”
Renters are most likely to find incentives, such as a free month of rent or parking fee waivers, in markets across the South and Midwest.
Salt Lake City has the largest share of rentals with concessions (60.3 percent) followed by Austin (55 percent); Charlotte, North Carolina (53.5 percent); Dallas (50.7 percent); Raleigh (50.6 percent); Nashville (49.9 percent); Washington, D.C. (49.4 percent); Minneapolis (49.4 percent); Phoenix (48.8 percent); and Denver (48.1 percent).
Most of these markets are also experiencing slowing annual rent growth, while Austin is the lone outlier as rents are 3.0 percent lower than February 2023.
Conversely, the metros with the lowest share of rentals with concessions are also experiencing rent growth that outpaces the national average (+3.5 percent yoy).
Only 12 percent of landlords in Providence offered incentives in February, as average rents grew 8.1 percent year over year. The markets with the second and third lowest level of concessions — Hartford, Connecticut (16.3 percent) and Cincinnati (18.9 percent) — saw rents increase by 6.4 percent.
While the ability to find enticing incentives is becoming harder, Prakash said renters can still find deals at new builds. “While concessions are beginning to dip, they are more common than they were a year ago, helped by new buildings that have opened their doors,” she said.
